Economics as Religion: From Samuelson to Chicago and Beyond

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The university system in America was originally designed to train Protestant ministers. Religion was a dominant force in our culture, and it encouraged us to express our altruistic tendencies. In the late nineteenth century new universities such as Cornell, Johns Hopkins and the University of Chicago were created to supply professional experts with technical skills, and the older universities were retooled to educate the corps of professional experts. In an increasingly secular society, altruism was replaced by self-interest.

Robert H. Nelson's book, Economics as Religion, is a history of modern economic theory, presented as a new form of secular religion in our society. His thesis is that the economics profession constitutes the new priestly class in the modern, materialistic, scientific world. Nelson, who has wide government experience as well as being a professor of public policy at the University of Maryland, states that in medieval Europe Christianity was the one universal government. It had a central bureaucracy in Rome, an organization with priests and churches in every village and its own universal language, Latin. The Church oversaw birth, education, marriage, all professional activity, sickness, old age, death, burial and society's moral character. The Church did all the things that the State does today. he argues that economics has replaced the Church in modern society, with its emphasis on the self-interested behavior of the scientific "economic man." Such a man, he asserts, is best described by the late M. I. T professor Paul Samuelson in his widely used textbook Economics. The scientific school of economics is based on the utter rationality of man. Utilitarian models can be constructed to analyze human behavior. Examples might include the use econometric models to ration the number of kidney dialysis machines. Not everyone in need will receive the benefits of a machine, but the number produced will be "optimized" from society's point of view. For purposes of distributing dollars raised in support of September 11 victims' families, the value of a human life c?an be readily computed by analyzing the number of years of expected remaining life, multiplying by the expected annual earnings power and discounting the income stream at an appropriate interest rate. Such "rational" analysis ignores the equality of pain and suffering and such distinctions as number of dependents.

Nelson contrasts what he terms the "Samuelson approach" to that of the school of economics founded at the University of Chicago with such Nobel laureates as Milton Friedman, George Stigler and Gary Becker. Their mentor was Frank Knight, who doubted there could be any possibility of the scientific management of society through the manipulation of self- interest. He felt human reason was frail, often corrupted by the baser elements in human nature. Knight felt the economic problem in society was a religious problem. The defense of freedom must rest upon an adequate moral and philosophical foundation. Human beings must be grounded in some cultural system, historically including religion as a main source of group identity. The market provides a place where people of different creeds can come together for voluntary exchange and mutual benefit.

Moreover, self-interest cannot dominate secular culture, as a culture of trust is an essential element in maintaining a successful market economic system. …